Florida Trust & Probate Attorneys Blog
By Phillip B. Rarick, Miami Trust Attorney
You have a valuable tax benefit from the IRS, but the deadline for taking advantage of this benefit is December 31. The IRS allows you to gift $14,000 per recipient each year tax free; if married, you can gift $28,000 per person.
Example: If you are married and have two children, you can gift $56,000 without incurring any gift taxes or using part of your lifetime gift tax exemption. (This exemption is $5.34 million; next year it will be $5.43 million.)
Annual gifting is a “use it or lose it” benefit. After December 31, you lose all rights to make a gift in 2014.
Note: The gift must be delivered to the recipient by the end of the year. Putting the check in the mail on December 31 is not considered a completed gift.
For gifts between spouses, there is an unlimited amount. So, husband, if your wife is asking for a $50,000 ring for Christmas, no problem. (I think I speak for husbands everywhere when I say that most likely our wives already knew this part of tax law.)
The Perils of Gifting. Before you get out your check book for the kids, consider first the perils of gifting outright. If you want to make sure that your gift goes to your child (not their spouse) or grandchild (and is used for their education, not on some foolish expense) then you need to consider a Gifting Trust. A Gifting Trust can help insure that your hard earned money goes to your children for the purpose that your intend and is not wasted.
Gifting Trust. Here is an example of the power of a Gifting Trust. Let’s say you and your wife have one adult son who is married with two children, both under the age of 18. Using a gifting trust, you can gift $84,000 tax free. Just as important, the Gifting Trust will have protective provisions so that the money for your son cannot be claimed by his spouse, and the money for the grandchildren is used for their college education when they turn 18 – and not a new, bright yellow Mustang.
For more information, contact Phil Rarick, Miami Trust attorney, at (305) 556-5209 or email to info@raricklaw.com.
Special Note
The information on this blog is of a general nature and is not intended to answer any individual’s legal questions. Do not rely on information presented herein to address your individual legal concerns. If you have a legal question about your individual facts and circumstances, you should consult an experienced Miami trust attorney. Your receipt of information from this website or blog does not create an attorney-client relationship and the legal privileges inherent therein.